vendredi 12 juin 2015

The state – the machinery and power of the state – is the potential resource or threat to every industry in the society. With its political power to prohibit or compel, to take or give money, the state can and does selectively help or hurt a vast number of industries. That political juggernaut, the petroleum industry, is an immense consumer of political benefits, and simultaneously the underwriters of marine insurance have their more modest repast. The central tasks of the theory of economic regulation are to explain who will receive the benefits or burdens of regulation, what form regulation will take, and the effects of regulation upon the allocation of resources.

Regulation may be actively sought by an industry, or it may be thrust upon it. A central thesis of this paper is that, as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit. There are regulations whose net effects upon the regulated industry are undeniably onerous ; a simple example is the differentially heavy taxation of the industry’s product (whiskey, playing cards). These onerous regulations, however, are exceptional and can be explained by the same theory that explains beneficial (we may call it « acquired ») regulation.

Two main alternative views of the regulation of industry are widely held. The first is that regulation is instituted primarily for the protection and benefit of the public at large or some large subclass of the public. In this view, the regulations which injure the public – as when the oil import quotas increase teh cost of petroleum products to America by $5 billion or more a year – are costs of some social goal (here, national defense) or, orcassionaly, perversions of the regulatory philosophy. The second view is essentially that the prolitical process defies rational explanation : « politics’ is an imponderable, a constantly and unpredictably shifting mixture of forces of the most diverse nature, comprehending acts of great moral virtue (the emancipation of slaves) and the most vulgar venality (the congressman feathering his own nest).

Why does not the powerful industry which obtained this expensive program instead choose direct cash subsidies from the public treasury ? The « protection of the public » theory of regulation must say that the choice of import quotas is dictated by the concern of the federal government for an adequate domestic supply of petroleum in the event of war – a remark calculated to elicit uproarious laughter of the Petroleum Club. Such laughter aside, if national defense were the goal of the quotas, a tariff would be a more economical instrument of policy : it would retain the profits of exclusion for the treasury. The non-rationalist view would explain the policy by the inability of consumers to measure the cost to them of the import quotas, and hence their willingness to pay $5 billion in higher prices rather than $2,5 billion in cash that would be equally attractive to the industry. Our profit-maximizing theory says that the explanation lies in a different direction : the present members of the refining industries would have to share a cash subsidy with all new entrants into the refining industry. Only when the elasticity of supply of an industry is small will the industry prefer a cash subsidy over entry or output.

This question, why does an industry sollicit the coercive powers of the state rather than its cash, is offered only to illustrate the approach of the present paper. We assume that political systems are rationally devised and rationally employed, which is to say that they are appropriate instruments for the fulfillment of desires of members of the society. This is not to say that the state will serve any person’s concept of the public interest : indeed the problem of regulation is the problem of discovering when and why an industry (or other group of like-minded people) is able to use the state for its purposes, or is singled out by the state to be used for alien purposes.

(…)

The idealistic view of public regulation is deeply imbedded in professional economic thought. So many economists, for example, have denounced the ICC for its pro-railroad policies that this has become a cliché of the literature. This criticism seems to me exactly as appropriate as a criticism of the Great Atlantic and Pacific Tea Company for selling groceries, or as a criticism of a politician for currying popular support. The fundamental vice of such criticism is that it misdirects attention : it suggests that the way to get an ICC which is not subervient to the carriers is to preach to the commissioners or to the people who appoint the commissioners. The only way to get a different commission would be to change the political support for the Commission, and reward commissioners on a basis unrelated to their services to the carriers.
Until the basic logic if political life is developed, reformers will be ill-equipped to use the state for their reforms, and victims of the pervasive use of the state’s support of special groups will be helpless to protect themselves. Economists should quickly establish the license to practice on the rational theory of political behavior.

vendredi 5 juin 2015

The key question is, of course, 'Where do such combinations lead?' As I have already noted, if overflows are first considered a problem, they eventually appear as an extraordinary resource for reflexivity, awareness and invention. Management often suspends thinking because of its primary reliance on given procedures and routines (Cyert and March, 1963); the emergence of overflows stops automatic answers and opens the way for criticism, reassessment and innovation.

The lessons learned are ambivalent. On the one hand, the collection of chapters stresses the surprising creativity attached to overflow management. Overflows are largely unexpected events. Largely, but not completely. See what happens in consumer markets: the unexpected flow of goods experienced on the demand side (Brembeck; Ekström; Czubaj) is fully controlled on the organizational side. Management is about producing, and products and services are produced to overflow markets. In the marketing economy, overflows are neither side effects nor the unwitting results of excessive framing; they are voluntary productions. For a long time, historians of consumption have shown the extent to which the production of marketing overflows paralleled the industrial revolution (McKendrick et al., 1982). Significantly, the Protestants, who as we all know were ascetically saving at work, were also frenetically consuming at home, at least by proxy (Mukerji, 1983; Campbell, 1987). To a certain extent, this volume celebrates creativity, in describing overflow producers as contemporary versions of Michel Serres' (1982) parasite. In several situations, managing overflows is a parasitic activity, in Serres' positive sense of the term: an activity aimed at giving value to that which others discard.

To use another metaphor, overflow managers can thus be presented as modern alchemists who succeed if not in turning lead into gold, at least in turning noise into positive sound (Willim), waste into biogas (Corvellec), and space emptiness into full human exchange (Raviola). Management is often acknowledge as a matter of framing, channeling, organizing a given entity. Here, we discover that management is also a matter of invention or transmutation. At least when facing overflows, management hybridizes with engineering, and powerfully contributes to human creativity.

But on the other hand, the production of overflows goes with an overflow of new problems and questions. For Czubaj, who meets Naomi Klein's (2000) former conclusions, the consumerist overflow of goods is produced as a pure sham. We think that we face infinite choices, but each item is merely an illusory variation of a same product. If Czubaj is correct, one could say that the Western capitalist economy ironically reinvents the old Soviet supply of unique generic products in a more perverse way, as the uniqueness of each good is now hidden behind the overflowing shams of diversity. If not illusory, creative overflows are at least ambiguous, upstream as well as downstream. Waste can well be converted into biogas, for instance, but this apparently positive production cannot exist without more questionable overflows of waste upstream (Corvellec) and green gas emission downstream. Even when neither illusory nor ambiguous, overflows run badly. In Raviola's Hundred Offices case, however astute may be the decision to pair artists with empty business space, this creative scheme proves difficult to implement, even in the most favorable cases, because of the difficulty of playing the 'connection vessels' game with 'non-homogeneous' liquids. And even when implemented, overflow management is often bypassed by the emergence of new types of overflows: the 'overplanning' of Tapiola's garden city is submersed by the prosaic forces of noise disturbances and car traffic flood (Pantzar). Last but not least, several overflow management schemes must face more discrete 'leaks' - problems or promises - when music escapes the dikes of property management systems, for instance (Wenzer). This issue introduces a fascinating distinction between two notions that are often confused. An overflow goes above a dike; a leak goes beneath or through it. An overflow often comes from the outside; leaks come from the inside. If less spectacular, are not leaks more frequent than and as transformative as overflows? In this respect, it would probably be worthwhile to avoid any leak from this project, to stick with the flow of research it opened, and to complement the study of overflow with the study of leak management.